Correlation Between Metals Exploration and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Metals Exploration and Polar Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Metals Exploration and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Exploration Plc and Polar Capital Technology, you can compare the effects of market volatilities on Metals Exploration and Polar Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Metals Exploration with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Polar Capital.
Diversification Opportunities for Metals Exploration and Polar Capital
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metals and Polar is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology and Metals Exploration is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Metals Exploration Plc are associated (or correlated) with Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of Metals Exploration i.e., Metals Exploration and Polar Capital go up and down completely randomly.
Pair Corralation between Metals Exploration and Polar Capital
Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 2.39 times more return on investment than Polar Capital. However, Metals Exploration is 2.39 times more volatile than Polar Capital Technology. It trades about 0.09 of its potential returns per unit of risk. Polar Capital Technology is currently generating about 0.14 per unit of risk. If you would invest 440.00 in Metals Exploration Plc on October 26, 2024 and sell it today you would earn a total of 155.00 from holding Metals Exploration Plc or generate 35.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Exploration Plc vs. Polar Capital Technology
Performance |
| Timeline |
| Metals Exploration Plc |
| Polar Capital Technology |
Metals Exploration and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and Polar Capital
The main advantage of trading using opposite Metals Exploration and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration position performs unexpectedly, Polar Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Polar Capital will offset losses from the drop in Polar Capital's long position.| Metals Exploration vs. Made Tech Group | Metals Exploration vs. Learning Technologies Group | Metals Exploration vs. Polar Capital Technology | Metals Exploration vs. Software Circle plc |
| Polar Capital vs. Wheaton Precious Metals | Polar Capital vs. Adriatic Metals | Polar Capital vs. Ecclesiastical Insurance Office | Polar Capital vs. Cornish Metals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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